3 Reasons You’re Still Struggling Financially

Written by Miranda Marquit on October 25, 2013

shutterstock_139005923

It’s hard to be in a position of financial difficulty. I remember struggling financially as a young wife attending graduate school. Unfortunately, many of us struggle longer than we have to. I know that I spent more years struggling with financial uncertainty than I needed to.

Some of the reasons that you might still be struggling financially include:

1. The Belief that a Bigger Income is the Answer

When I was struggling financially, I firmly believed that making more money would solve my problems. I thought if my income hit a certain level, everything would be just fine. Imagine my surprise when I hit that level -- and I still struggled financially.

It’s not so much about how much money you are making as what you do with it. Take a look at how you spend your money. If you spend it on things that aren’t important to you, chances are you will never have enough. Mismanaged cash flow is usually a bigger problem than the amount of money you have.

2. You Focus More on Cutting than Earning

There is nothing wrong with cutting expenses from your life -- especially if they are unnecessary and unimportant to you. However, there is only so much you can cut from your budget. You reach a point where you are at the bare minimum, and you might still be struggling. If you want to boost your position, it’s important to start earning more. You can always earn more.

Just remember to make sure you have your management down first. Just earning more isn’t enough to move forward.

3. Not Enough Focus on Getting Rid of High Interest Debt

High interest debt is the enemy of financial independence. When you pay interest, you are sending money straight into someone else’s pocket. The longer you have high interest debt, the more money is siphoned away. You don’t get anything back for that, beyond the ability to borrow money.

It’s important, though, to understand that not all debt is created equal. High interest debt, such as credit card debt, is far more detrimental to your financial situation than low interest mortgage debt. It makes sense to pay off your high interest credit card debt quickly, rather than carrying it indefinitely. However, getting too excited about paying off low interest debt, like a 3.75% mortgage with tax benefits (if you itemize), can also hold you back. My investments return much more than 3.75% annualized, which means I’m better off putting extra money toward investing, rather than paying down my mortgage.

Bottom Line

A lot of what’s holding you back financially is likely rooted in your mindset. Change the way you think about managing your money, and there is a good chance that you will be able to overcome some of your financial struggles.

Posted Under: Savings
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About Miranda Marquit

Miranda is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds.


Oct25

shutterstock_139005923

It’s hard to be in a position of financial difficulty. I remember struggling financially as a young wife attending graduate school. Unfortunately, many of us struggle longer than we have to. I know that I spent more years struggling with financial uncertainty than I needed to.

Some of the reasons that you might still be struggling financially include:

1. The Belief that a Bigger Income is the Answer

When I was struggling financially, I firmly believed that making more money would solve my problems. I thought if my income hit a certain level, everything would be just fine. Imagine my surprise when I hit that level -- and I still struggled financially.

It’s not so much about how much money you are making as what you do with it. Take a look at how you spend your money. If you spend it on things that aren’t important to you, chances are you will never have enough. Mismanaged cash flow is usually a bigger problem than the amount of money you have.

2. You Focus More on Cutting than Earning

There is nothing wrong with cutting expenses from your life -- especially if they are unnecessary and unimportant to you. However, there is only so much you can cut from your budget. You reach a point where you are at the bare minimum, and you might still be struggling. If you want to boost your position, it’s important to start earning more. You can always earn more.

Just remember to make sure you have your management down first. Just earning more isn’t enough to move forward.

3. Not Enough Focus on Getting Rid of High Interest Debt

High interest debt is the enemy of financial independence. When you pay interest, you are sending money straight into someone else’s pocket. The longer you have high interest debt, the more money is siphoned away. You don’t get anything back for that, beyond the ability to borrow money.

It’s important, though, to understand that not all debt is created equal. High interest debt, such as credit card debt, is far more detrimental to your financial situation than low interest mortgage debt. It makes sense to pay off your high interest credit card debt quickly, rather than carrying it indefinitely. However, getting too excited about paying off low interest debt, like a 3.75% mortgage with tax benefits (if you itemize), can also hold you back. My investments return much more than 3.75% annualized, which means I’m better off putting extra money toward investing, rather than paying down my mortgage.

Bottom Line

A lot of what’s holding you back financially is likely rooted in your mindset. Change the way you think about managing your money, and there is a good chance that you will be able to overcome some of your financial struggles.

About Miranda Marquit
Miranda is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds.